Sickle Innovations Market Strategy Report
Sickle Innovations Market Strategy Report
net/publication/332396449
CITATIONS READS
0 778
1 author:
SEE PROFILE
Some of the authors of this publication are also working on these related projects:
Strategic Planning for enhancement in milk procurement in Baroda District View project
All content following this page was uploaded by Malik kumar Meena on 13 April 2019.
By
Submitted to
Sickle Innovations
1
ACKNOWLEDGEMENT
It was an immense eight weeks learning experience of farm equipment industry, the ground
reality of agriculture input supply chain. As is the case with any human endeavour where seldom
does one achieve something all by oneself, my Management Traineeship Segment (MTS) was no
different. I am indebted to a multitude of people who have been kind enough to help us in carrying
out this study. But, first and foremost, I would like to express our gratitude to our college - Institute
of Rural Management, Anand (IRMA) - and Sickle Innovations, Ahmedabad for giving us this
opportunity.
I would also like to express my gratitude to our reporting officer at my host organization,
Sickle Innovations, Mr. Nitin Gupta and Mr. Haijaaj Ali. The role of my reporting officer has been
of immense importance to me, for it is due to his guidance and critical viewing of our work that our
field work study, and as a result this report has got its width and depth. I would like to express my
gratitude to our faculty guide Prof Vanita Yadav to give provide immense support and guidance for
the project.
I would also like to thanks for the support of Centre of Innovations, Incubation and
Entrepunership (CIIE). And, it will be next to impossible to stress enough the help and support that
we received from complete staff of CIIE, IIM Ahmedabad.
Finally, we are grateful to the All the stakeholders where I went for fieldwork who patiently
answered my queries and questions. Thank you all.
.
i
Executive Summary
I Title: Product: Go To Market Strategy
II Organisation: Sickle Innovations, Ahmedabad
III Reporting Officer: Mr. Hijaaz Ali
IV Faculty Guide: Prof. Vanita Yadav
V Participant's Name: Malik Kumar Meena
Introduction: Sickle Innovations is a start-up founded by Mr Nitin Gupta. The first product was developed as an
academic project while at IISc Bangalore. The company was registered in Jan 2014 with CIIE as a registered
office. The company’s first product, cotton harvesting machine is currently undergoing field tests in Gujarat and
Maharashtra. Other upcoming products are Weeder and Fruit harvester.
Objective: Objective of this study was to understand the different dynamics of agriculture input industry,
especially Farm equipment’s by studying role and responsibilities of different players in various agriculture
input sale channels and developing Go to Market strategy based on that.
Methodology and Data Sources: Primary source of information are unstructured interviews with different
players like dealers, retailers, exporters, importers, farmers, and different organisations like Gujarat Agriculture
department, Farmer producer organisations and textile companies. Sales channel of sprayers is studied to
understand traditional sales channel. Secondary source of information are reports of different institute like
International Textile Manufacturers Association, Agriculture Machinery Manufacturers association, International
Trade Centre etc.
Major Findings: Major finding of this study are based on information from primary and secondary sources. Small
farm implement industry like sprayer industry, lack research and development. As soon as one manufacturer
develops a product, it is copied by all other manufacturers.
Traditional sales channel play an important role in providing farm inputs to farmers, as it has the maximum reach
among the farmers, but despite this they are costly to the farmers because of good profit margins passed onto the
wholesalers and retailers. Wholesaler plays an important role in maximising the reach to retailers and in
facilitating product demonstration, while retailer plays a major role in pushing product to farmers.
Farmer Producer Organisations can play an important role to increase the promotion of product and acceptance
among the farmers, FPO like Maha Gujarat Farmer Producer Company have their own retail outlet called “Apna
Kisan Mall” to provide required inputs to farmers after product testing with minimal margins.
Cotton picker is already available in the market, as a Chinese imported, however, it is not accepted by farmers
owing to its poor efficiency. Cotton picking is currently done by manual labour, picking cost accounts for 20 %
of total cotton production cost. Cotton requires picking around 3-4 times, and in peak time labour shortage also
problem to cotton growers.
Manual cotton picking lead to possibilities of contaminating the quality of cotton lint, further increasing the labour
costs incurred in yarn making process in textile industries. Contamination in cotton include leaves, dirt,
polypropylene thread of fertilizer bags hair etc., which are added into cotton during picking and storage. Sickle
innovations’ cotton picking machine can help in avoiding contamination and it can act as a disrupting for the
market and textile industry.
Conclusion:- Sickle innovations, being a start-up, aims to achieve breakeven or at least create a solid ground for
its product before it gets copied in the market. Going by traditional sales channel will consume time to create
awareness among the farmers, also it will be very costly to increase product reach in wide geography, hence we
plan to target textile companies which procure cotton as our target clients first before going through traditional
sales channels. Acceptance of this product by textile industry will gradually create and augment its usage among
farmers.
ii
Table of Contents
1 INTRODUCTION ................................................................................................................... 1
1.1 Sickle Innovations .............................................................................................................. 1
1.2 Indian Agriculture .............................................................................................................. 2
1.3 Agriculture Machinery: ...................................................................................................... 2
1.4 Cotton Cultivation in India ................................................................................................. 3
1.5 Cotton Textile industry....................................................................................................... 6
2 OBJECTIVE AND METHODOLOGY .................................................................................. 8
2.1 Objective ............................................................................................................................ 8
2.2 Methodology ...................................................................................................................... 8
3 SALES CHANNEL ............................................................................................................... 10
3.1 Manufacturer/ Importer: ................................................................................................... 12
3.1.1 Research and Development....................................................................................... 13
3.1.2 Product promotion: ................................................................................................... 13
3.1.3 Credit......................................................................................................................... 14
3.1.4 Post Sale Services ..................................................................................................... 14
3.1.5 Demand Forecasting ................................................................................................. 14
3.1.6 New Dealership ......................................................................................................... 14
3.1.7 Margin ....................................................................................................................... 15
3.2 Distributors/Wholesaler ................................................................................................... 15
3.2.1 Role of wholesaler .................................................................................................... 15
3.2.2 New Retailer ............................................................................................................. 15
3.3 Retailer ............................................................................................................................. 16
3.3.1 Cross Selling ............................................................................................................. 16
3.3.2 Inventory Management ............................................................................................. 16
3.3.3 Service:- .................................................................................................................... 16
3.4 Price.................................................................................................................................. 17
3.4.1 Farmers ..................................................................................................................... 17
3.4.2 Maha Gujarat Farmer Producer Company ................................................................ 17
3.4.3 Avirat Farmer Producer Company ............................................................................ 18
4 CONTAMINATION PROBLEM IN COTTON ................................................................... 19
iii
4.1 Different Source of contamination ................................................................................... 20
4.2 Previous attempt to control Cotton Contamination .......................................................... 20
4.3 Arvind Limited ................................................................................................................. 24
5 IMPORTS .............................................................................................................................. 25
6 SUBSIDY SYSTEM ............................................................................................................. 28
6.1 Procedure of taking benefit of Subsidy scheme ............................................................... 28
6.2 Expression of interest for Manufacturers to provide subsidy on their products .............. 28
6.2.1 Selection process ....................................................................................................... 29
6.2.2 Terms and Condition................................................................................................. 30
6.2.3 Minimum eligibility criteria ...................................................................................... 31
7 RECOMMANDATIONS ...................................................................................................... 32
7.1 SWOT analysis of different channels............................................................................... 32
7.1.1 Traditional sale channel ............................................................................................ 32
7.1.2 Farmer Producer Organisation’s ............................................................................... 33
7.1.3 Cotton Textile Manufacturers ................................................................................... 34
7.2 Design of Sales Channel for Gujarat ................................................................................ 36
7.2.1 Sales Force ................................................................................................................ 39
8 CONCLUSION ..................................................................................................................... 41
9 REFERENCES ...................................................................................................................... 42
iv
List of Tables
Table 1 : Share of different farm power Source in Indian agriculture (In Percentage) .................... 3
Table 2 : Cotton cultivation in India ................................................................................................. 3
Table 3: State wise cotton production (lakh bales) from 2004-05 to 2013-14 ................................. 4
Table 4 : State wise Cotton Productivity .......................................................................................... 5
Table 5: Cost of Cotton Production .................................................................................................. 6
Table 6 : Cotton Contamination Weightage index ......................................................................... 22
Table 7: incidence of contamination ............................................................................................... 22
Table 8 : Overall Contamination Index .......................................................................................... 23
Table 9 : Cotton Contamination Rating .......................................................................................... 23
Table 10 : India’s import of Cotton Picker from China .................................................................. 25
Table 11: China Export to World.................................................................................................... 25
Table 12 : China’s Cotton picker export to different countries (Value in 000USD) ...................... 26
Table 13 : Specification for Cotton Picker ..................................................................................... 30
Table 14 : Region 1 ......................................................................................................................... 36
Table 15 : Region 2 ......................................................................................................................... 38
Table 16 : Region 3 ......................................................................................................................... 38
v
List of Figures
vi
List of Annexure
Annexure 1 : Matrix for product Comparison ................................................................................... i
Annexure 2 : List of Companies ....................................................................................................... ii
Annexure 3: Screenshot of [Link] ........................................................................... iii
Annexure 4 : FPO's In Gujarat ......................................................................................................... iv
vii
List of Abbreviations
viii
ix
CHAPTER I
1 INTRODUCTION
1
1.2 Indian Agriculture
In 1950, the agriculture sector contributed 57% of national GDP and employed 70% of the
population of the country. Today the share of agriculture in GDP has fallen to an alarming
13.7%, but still employs 55% of the population (as compared to the service industry that
accounts for two thirds of the total output with only one third of the total workforce). Around
80% of these Indian farmers are small and marginal farmers (98 million farmers) and their
contribution is only around 51% of total agricultural output.
Important Trends in Indian Agriculture
In hilly parts of the country and remote areas, most of the farm operations are still being
performed manually or by the animal drawn equipment. This will continue to be the case
in future also. Hence, both small and large size machines would be needed
Average size of farm holdings has gradually reduced from 2.3 hectares in 1970 to 1.16
hectares in 2010-20111. Fragmentation will continue due to ‘Laws of Inheritance’ and
‘Hindu Succession Act’ where the father would divide the land amongst his sons
Labour shortage is being experienced at peak seasons due to the enactment of the
National Rural Employment Guarantee Act and huge demand from the construction
sector in cities; this leads to labour being more expensive
1
Source: All India Report on Number and Area of Operational Holdings, Agriculture Census, 2010–11, Ministry of
Agriculture, 2012, website ([Link] accessed on
11 December 2014).
2
Indian Agriculture Census, 2011-12
2
Table 1 : Share of different farm power Source in Indian agriculture (In Percentage)
3
Gujarat and Maharashtra accounts for more than 50 % of total India’s production, state wise cotton
production data are given in table no 3
Table 3: State wise cotton production (lakh bales) from 2004-05 to 2013-14
4
Table 4 : State wise Cotton Productivity
Maharashtra 311 213 288 330 335 319 379 305 323.93 368.8
Madhya
Pradesh 472 494 479 540 490 424 462 433 531.25 520.13
Andhra
Pradesh 469 527 612 690 644 628 566 507 595 569.41
Karnataka 261 268 272 337 375 457 346 430 525.77 629.63
Tamil Nadu 725 668 697 678 780 817 1003 831 796.88 611.51
Orissa 314 470 333 571.43 507.46
All India 470 478 521 554 524 502 517 493 518.03 565.36
5
Cotton picking accounts for almost 20% of total cotton production cost.
Table 5: Cost of Cotton Production
6
Contaminations are not being grown with cotton balls in the tree. These are mostly "added" in
fresh cotton during picking. In value chain of cotton, contamination happen during crop harvesting
and cotton storage time. Since cotton is picked manually by rural woman so human hair,
contamination caused by cloth pieces and fabric sheets are the biggest source of contamination.
Indian farmers use fertilizer bag for storing cotton, fibre of fertilizer bag are also major source of
contamination. More detail about contamination in cotton and existing practices of controlling it
are described in Chapter 4.
7
CHAPTER II
2.1 Objective
Objective of this study are following
Understand the different dynamics of agriculture input industry, especially Farm
equipment’s by studying the role and responsibilities of different players in various
agriculture input sale channels and designing sales channel for the organization based on
the study
Understanding Farm equipment subsidy system in Gujarat
Understanding Cotton Contamination problem in India and the role of Cotton picker in
reducing the contamination
2.2 Methodology
The scope of this study is limited to Gujrat and Maharashtra only. Most of the stakeholders are
based in Ahmedabad, Anand, Nadiad and Kheda District of Gujrat. Farmer producer
organizations of Amreli district have also been studied.
In order to understand the role of different stakeholders in farm input supply chain, I undertook
certain methodologies for gathering data and information. Both secondary and primary data have
been used to understand the farm input supply chain.
Secondary sources of information studied are reports of different Government organisations like
International trade centre, Ministry of Textiles, Cotton Corporation of India, and also private
institutes like Agricultural Machine Manufacturers Association etc.
Primary sources of information are interviews with different stakeholders which include farm
equipment dealers, retailers, importers, Farmer Producer Organizations, cotton mills etc. Method
of information collection was qualitative survey with unstructured questionnaires.
8
Figure 1: Data Collection Methodology
In-Depth
Primary
Interviews
Data
Sources Reports
Secondary
Internet
9
CHAPTER III
3 SALES CHANNEL
Sale channel is method of distribution used by company to sell its product. It involves creating a
reach for its product to customers, managing the flow of product, cash and information between
different stakeholders.
Traditional Sale Channel
The traditional sales channel is used by most of the companies. Main stakeholder in this channel
are Clearing and Forwarding agents (C &F), Distributors, Wholesales, and retailers. The
traditional sales channel has a maximum reach to customers. Retailers are the contact point for
consumers from where they buy products.
In order to design sales channel for cotton picker I studied the sales channel of competitive
product, Knapsack Sprayers. Knapsack sprayer was selected after developing a matrix in which I
considered various farm equipment which are similar to cotton picker. Major attributes for
alternate product selection are following
Innovative product: Cotton picker is a new product in Indian market and yet to be accepted by
farmers, unlike existing product which have demand in the market, new product doesn’t have
much demand in market and require push by manufacturers to penetrate market. Demonstration
is also required by new product to create demand among customers.
Product demonstration: Being a new product Cotton Picker requires proper demonstration to
create awareness and demand of the product. Dealers play an important role in product
demonstration, hence the product demonstration is an important attribute.
Post Sale Services Most of the design sophisticated product require post sale service like
product repair by a trained person. Cotton picker also have sophisticated design, need to provide
training to people who can repair it.
Target Customer: I considered a target segment in terms of his/her income and willingness to
pay for a particular product. Cotton picker and Knapsack have almost same price.
Time of purchase: Product purchase time is important to maintain inventory. It is also
important for understanding the customer purchase cycle and the availability of sufficient money
10
when one wants to buy the product. Knapsack sprayers are required after sowing and before
harvesting. Cotton picker product is required before harvesting.
Cost and Size: Cost and Size of a product is an important attribute from the retailers' point of
view. If it is a big product, retailer would not want to store inventory of product, and he will
order in small batches to save space. Same is the condition with the cost of the product, if the
product is costly, then retailers will seek credit from dealer and also store less unit of inventory
to maintain liquidity his business. Sprayers and cotton picker, both have almost same size and
the product cost is also almost same.
Competition : in India as of now cotton picking is done by manual labour, hence cotton picker
have competition with manual labour, sprayers do not have competition with manual labour, but
power sprayers is more efficient that hand operated sprayers and have competition with labour.
The other product are compared in matric are Rice Transplanter, Brush cutter, cage wheel,
Milking machine etc. Detailed matrix is in Annexure 1
After selecting sprayers as alternate product, traditional sales channel of sprays was studied to
understand the design and role of different players in its sales channel
Traditional Sales Channel
Most of the companies uses traditional sale channel. Number of players and role of each player
can vary across different organisations. Sales channel of some of the organisation are disused
below
Aspee –
Aspee is among of top companies in crop sprayers industry. It has a distributon network in each
state, it provide exclusive dealership in each state, only authorised distributor can directly buy
from company, in Gujarat its distributor is located in Himmatnagar district. This distributor then
supplies product to the wholesaler located in different district. From manufacturer to retailer it is
having 3 different stakeholder, i.e. distributor, wholesaler and retailer. Involvement of three
player increase final price of the product, but also reduces company cost by maintaining
relationship with only one dealer in each state.
11
Almighty Agrotech
Almighty is Rajkot based farm Equipment Company. It imports crop sprayers from China. Sales
of this company product is done by another company “Bhagwati”. Bhagwati is also agro
equipment company, but its products Animal drawn farm equipment with “Gokul Brand”.
Bhagwati have its dealer in each district and target them directly.
Figure 2: Traditional Sales Channel
Exporter Manufacturers (India)
Distributors
Distributors
Wholesaler
Wholesaler
Retailer
Retailer
Consumer
Consumer
Almighty Agrotech
Almighty is Rajkot based farm Equipment Company. It imports crop sprayers from China. Sales
of this company product is done by another company “Bhagwati”. Bhagwati is also agro
equipment company, but its products Animal drawn farm equipment with “Gokul Brand”.
Bhagwati have its dealer in each district and target them directly.
12
Role of Manufacturer
13
3.1.3 Credit
Manufacturers or Importers does not provide any credit to their dealers and demand advance
payment. After receiving payment from dealer, manufacturer ship product at dealer’s location.
Cost of transportation is also borne by dealer. Dealer takes order from retailer, and supply
product to retailers. The terms of credit between the distributor and the retailer depends on the
relationship between the two. Retailer further can provide credit to farmers if the farmer is a
loyal customer. Most of the dealer and retailer are in business of multiple agro products, like
Seeds, Pesticides and Farm equipment. Requirement of these products is spread across cropping
season, seeds required before sowing, and then pesticide and then farm equipment, hence it is
easy for dealers and retailer to manage inventory and working capital.
14
Manufacturer then reviews dealer’s business in terms of dealers reach to retailers and then decide
make a decision.
3.1.7 Margin
Agriculture sprayers do not have Maximum Retail Price, hence there is no fix margin defined by
manufacturers. Manufacturers provide product catalogue to dealers, which have price of the
product printed, dealers check the price of similar product, and if product price is competitive to
other products, he places an order. Margin is decided by dealers only, manufacturers do not play
any role in it. Dealers add 10-15 % of margin on these products and give it to retailers. Retailer
margin is also 15-20%. As there is no fix price of the product, final price is decided by
negotiation between farmer and retailer. If dealers and retailer take margin, it increase final price
to consumer, and farmer will shift to another retailer, hence level of market competition drive
down retailer and dealer margin.
3.2 Distributors/Wholesaler
Distributors buys product from company and have exclusive rights to supply product to a
wholesaler in the territory. Aspee has only one distributor in each state, in Gujarat Aspee
distributor is in Himatnagart, who supplies product to other wholesaler and retailer. Other
manufacturers directly supply product to wholesalers. Manufacturer supply product in lot of 25
unit.
3.3 Retailer
Retailer is the most important link in sales channel, as he is closes to the farmers. Farm
equipment retailers are located in small towns near village. Most of retailer deals in Seeds,
Pesticide and Small farm equipment like Sprayers. Dealing in multiple product helps retailer to
manage their working capital requirement. Retailer buy product from dealer by paying in
advance or can avail credit.
Responsibilities
3.3.3 Service:-
Post sale services are provided by independent service people, retailer does not play any role in
it. Most of the problem in sprayers cannot be repaired, they require some part replacement, so
farmer buys that spare part from the retailers, and then it is replaced by serviceman. If product is
having warranty, then retailer keep original part, and give other spare part to farmer, later he
send that part to company
16
3.4 Price
Sprayers do not have any fix price, some even don’t MRP Printed on them. Retailer decides final
price based on competition. As there is not standard price, farmers bargain with retailer to reduce
the price, and if his things that price is high comparatively, he can buy product from another. To
avoid farmer switching, retailer need to drive down his margin to sale product. Margin of retailer
vary around 10-15 %, these are not fixed. Usually margin of Knapsack sprayers are around 150-
200 Rs per piece for the product of 1200-2000.
Unobtrusive observation
Retailer business depends on how he manages relationship with farmers.
One farmer visited retailer shop, he wanted to seeds of few crops, for 2 crops seeds were available
in open bags, and one can buy as par his requirement, but for Lucerne no open seeds were
available, they were available only in packet size of one KG ( treated and packed by company) and
sold in multiples of one kg. That farmer have small land holding and cannot buy 1 kg of seeds, as
he doesn’t require in that much quantity, he wants only 500 gram of that seed. Firstly retailer
denied to farmers to provide 500 gm , but after few minutes he gave him 500 gm seeds, and keep
500 gram sees with him. Closed packet is genuine, and open packet is now unlikely to buy by
farmers, until and unless he want only 500 gram. if no one want to buy that remaining 500 gm, then
it is loss for retailer, as he cannot return opened packet to company.
3.4.1 Farmers
Farmers are the final consumer of product. Most of the farmers in Gujarat buy farm input
directly from retailers, other options are directly from Wholesaler, Farmer Producer Organization
etc.
As cost of hand operated Knapsack sprayer is 1000-1800, small and marginal farmer can buy it
without availing credit, whereas battery operated sprayer cost is around 3000-4000, Big farmer
can buy it without availing credit.
Retailers usually don’t provide credit to farmers, but if farmer is having good relationship with
retailer he can avail credit from retailer.
17
it is having 112 malls spread across Gujarat. Apna Kisan malls are located in villages and towns,
minimum 100 members are require to open one Apna Kisan Mall in village. Apna Kisan Mall
provides Inputs like Seeds, Fertilizer, Pesticide and Cattle feed to its members at 16 percent to 60
percent less price then open market price. FPO have contact with companies like Ralies,
Chambal to provide different input. Associated company directly delivers inputs to Apna Kisan
Mall. FPO sale these product at 6 % margin. This system eliminate role and margin of dealers
and retailers, hence reduce input prices. FPO first test input before making any contact with
company, if Input is good and feasible in local condition, then only company can supply product
to Apna Kisan Mall. FPO also helps farmers for getting subsidy on products which are not
available in Apna Kisan Mall.
18
CHAPTER IV
Figure 3 describes the value chain of cotton. After harvesting farmer sells the cotton to traders or
APMC or direct to the ginner. In ginning mill after removing the trash and contamination from
cotton, seed and lint is separated. Lint is pressed to make bales out of it. According to Cotton
Corporation of India the weight of standard cotton bale is 170Kg but it can vary on the basis of
cotton quality. In spinning mill yarn is made from bale. Yarn is used for fabric preparation. In
this whole chain most of the contamination occurs in the farmer’s field during crop harvesting
and storage stage.
Figure 3: Cotton Value Chain
Cotton
Ginning Mill Spinning Mill Fabric Mill
Farmer
Product
Consumer Retailer
Manufacturer
Presence of foreign material in raw cotton is one of the serious problem affecting the cotton
spinning industry. According to a recent survey by ITMF1, Indian cotton is most contaminated
cotton in the world. Contamination present in raw cotton deteriorates the quality of fabric.
Contamination is a significant threat and also an element of cost to spinning mills and this led them
to implement a costly methods to remove the contamination including use of manual labour to
remove contamination. This challenge can be met with selection of suitable cotton verities, good
work practices and proper use of modern technologies
1
International Textile Manufacturing Federation is an international body, it is conducting survey since 2003 to
check Cotton Contamination in different countries.
19
4.1 Different Source of contamination
Contamination is serious problem affecting cotton fibre, sometime the whole product is rejected
by buyer due to contamination, even though basic material has been made from best cotton and
product was made using latest machines. Contamination is one of the critical issues for spinners
to maintain first grade yarn quality because it causes the breakages in the warping, sizing, and
weaving results in tile defective packages as well as faults in the fabric thus lowering the efficiency
means increased cost of production.
20
Olam in Tanzania provides jute storage bags to farmers that are sealed for storage at home and
delivery to the gin, where a manual cleaning process similar to that of Dunavant is used. Olam is
doing the same pre- cleaning at the gin.
In 2010 Common Fund for Commodities (CFC) also introduced plan to reduce cotton
contamination in West Africa, CFC plan to reduce cotton contamination using two methods-
Supervised Picking – It involved training of farmers to keep cotton field free of any
contamination material like fertilizer bag, better agronomic practices so that minimum
trash is picked along with seed cotton. Fertilizer use was optimized to avoid excessive
vegetative growth and proper weed control to reduce trash content from seed cotton.
Supply of Cotton Bags and Sheets – Cotton bags and sheet were supplied to farmer to
reduce use of fertilizer bag for cotton packing. These cotton bags were directly transported
to ginning mills.
CFA planned to passing premium down to farmers to motivate for providing contamination
free cotton.
In India GTN Group also tried to reduce contamination at farmer’s field. GTN GROUP is well-
known in the textile industry in India specializing in the manufacture of 100% cotton combed fine
and superfine yarn. From 1999 onwards it have evolved a scientific and systematic evaluation
system for detecting contamination in cotton, based on weight and a number of occurrences of
contaminations .it has segregated and classified contamination based on its severity and
harmfulness and the Weightage index is arrived at shown in table no 6.
These contamination were checked in bales of cotton, GTN Randomly selected 2 bales out of 50
bales and carried out this test.
21
Table 6 : Cotton Contamination Weightage index
22
Table 8 : Overall Contamination Index
23
4.3 Arvind Limited
Arvind Limited (formerly Arvind Mills) is a textile manufacturer and the flagship company of
the Lalbhai Group. Arvind is largest supplier of denim. It imports 30% of its total raw material
from western countries because of contamination problem in India. Annualy Arvind mills procure
around 7, 00,000 cotton bales.
It is having its contract farming model in Akola Maharashtra and collaborated with COTTAP
research foundation to promote clean cotton production
Sickle innovation tested its cotton picker in Chopda of Jalgaon district if Maharashtra to evaluate
the role of cotton picker in reducing cotton contamination. It followed two different procedures
Cotton picking using Machine: cotton was picked using cotton picker. Farmers are trained for
picking cotton using machine. After picking cotton was directly transported to cotton bag to avoid
contamination at storage stage. These bag were directly transported to ginning mill for checking
trash content and bale preparation
Manual cotton picking: Manual cotton picking was also done, and similarly cotton was packed
directly into cotton begs, rest of the process is same.
It was to compare the level of contamination among different methods, i.e cotton picking by
machine, manual cotton picking and packing in cotton begs, and tradition method of cotton picking
in which after manual cotton picking cotton in stored in open condition.
Ginning- ginning is a process in which cotton is converted into bale. First step of ginning is cotton
cleaning. Manual labour is used for removing trash from cotton. Ginning mill which is producing
60 bales per day requires 270 labour for cotton cleaning. After cotton cleaning, seeds are removed
from cotton, and seed and cotton lint is separated. Once again cotton lint is cleaned manually. After
proper cleaning cotton lint and pressed for bale making. One Indian bale weight is 172Kg.
Spinning: Bale is opened to check contamination. Heavy machine which detect foreign material
in bale based on colour are used for further cotton cleaning. White colour contamination material
such as polypropylene thread which are white in colour cannot be detected by machine affect fibre
quality. Cotton picker can an important role here. It reduces cotton contamination, especially trash
and polypropylene thread as cotton bags are used for cotton packing, will reduce cost to ginners
and spinning mills. Textile manufacturer like Arvind can promote it among their supplier for better
cotton quality
24
CHAPTER V
5 IMPORTS
India is importing Cotton picker from China since 2008. Even after six years farmers are not
aware of this product in market which is attributed to no or poor marketing efforts by the
importer. World Customs Organisation (WCO) have an international standard system of terrify
nomenclature known as Harmonized System (HS). HS code of cotton picker is 84335920.
In 2008 India imported cotton picker worth 75000USD, which in 2011 increased to 2003000
USD, but in 2013 it again fell down to 147000USD. Whereas China’s total export of this product
increased in 2013, it indicates that china’s export of this product is shifting to other countries
from India.
Changes in import value is also affected by the price of the product, but unavailability of price
pattern doesn’t provide proper picture of imports over the year.
Table 10 : India’s import of Cotton Picker from China
Table no- 12 and Figure 4 analyses the global trend of cotton picker export from China. As it is
clearly illustrated from graph, that in 2011 India imported maximum number ( worth 20,03,000
USD )of cotton picker from china, In 2012 biggest importer were Uzbekistan with 4,64,000 USD
25
and Turkmenistan with 4,45,000 USD. In year 2013 this import shifted to Kazakhstan with
11,80,000 USD, North and South Sudan with 6,08,000 USD and other big importer are Djibouti,
Russia federation, Egypt and Tajikistan.
Table 12 : China’s Cotton picker export to different countries (Value in 000USD)
26
Figure 4 : China’s Cotton picker export to different countries (Value in 000USD)
2500
2000
1500
1000
Exported value in 2011
500
Exported value in 2012
0
Sudan (North +…
Korea, Democratic…
Exported value in 2013
India
Canada
Djibouti
Saudi Arabia
Cambodia
Tajikistan
Uzbekistan
Mexico
Kazakhstan
Bangladesh
Spain
Turkmenistan
Russian Federation
Egypt
Pakistan
Viet Nam
Jordan
Source- International Trade Centre
In China major exporter are located in Zhejiang Taizhou region, it is major manufacturers and
exporting hub of china for cotton picker and sprayers. Cost of production is low in region
because of high volume production and availability of supporting companies like battery and
motor manufacturer in the same region. Gross margin on these product is very less as prisoner
dilemma every factory tries to make lowest price to their client to get offer, and they furthers
pass to their supplier to reduce cost. Gross profits of these companies are as low as 10%.
List of Cotton picker exporter companies in China and Indian companies purchasing this product
is in Annexures 2
27
CHAPETR VI
6 SUBSIDY SYSTEM
28
different farm equipments need to follow certain procedures and have to meet certain condition
for availing subsidy on their manufactured farm inputs. Condition for empanelment are such that
startup like Sickle Innovations cannot participate in process, as manufacturers requires minimum
two year of business, minimum turnover of 25 Lakes in last two years and established dealer
network. But it can be useful for Sickle Innovations in future, hence procedure and conditions
for this empanelment mentioned below.
The Director of Agriculture on behalf of farmer call for the best price offer from the
manufacturers of these equipment. It also help the manufacturers to increase their market share
in the State considering the large scale implementation of the scheme. Only those manufacturers
who will be successful in empanelment at the end of process will be able to supply farm
implements/equipment to the farmers who want to avail financial assistance under any scheme
implemented by Agriculture and Co-operation Department. The list of empanelled manufacturer
containing details such price offer and their dealer network in the State will be published in the
public domain with an objective to facilitate the farmer to select specified quality of all this
equipment at reasonable price across the State.
Interested manufacturers can download application form to participate in empanelment process
from website ([Link] free of cast and submit the form along with the DD
of INR 5000. Physical proposal along with technical detail needs to submit in physical form and
other detail including price will be in electronic form on website [Link] .
29
Manufacturer need to submit minimum three invoice raised by dealer or customer. Performance
security of 1, 25,000 INR with bank is required after successful selection for empanelment.
Performance security vary from product to product, for cotton picker it is 1, 25,000 Rs.
Sr Particular Specification
1 Product
2 Model No
3 FMTTI or GOI approved Test Report
4 Director of Agriculture, Gujarat State approval
letter for specified model
5 L x W x H in mm
6 Picking capacity (kg/hr)
7 Weight in Kg
8 Battery specification
List of the dealers will be available on public demine, farmer will check information
about dealer, buy product, and will submit required document, subsidy will be
released after verification of all document.
The Authority has right to disengage the empanelment of the manufacturer or
importer if found that product supplied is not as per the minimum specified standard
30
and/or specification registration gets invalid. The manufacturer shall have to submit
the renewed IS certificate/registration to the authority as and when it gets invalid
during the period of empanelment.
Manufacturers cannot sell product in open market below specified price, if found then
it will attract suitable penalty. And also cannot back out in any stage, if he, then he
will not be allowed to participate in future.
The Authority may conduct site visit of manufacturing facility to ascertain the
manufacturer status and manufacturing facility of the manufacturer. In case if the
authority finds during the site visit that applicant is not a manufacturer, its
proposal/empanelment shall be cancelled with immediate effect and the bank
guarantee shall be forfeited in case of empanelled manufacturer.
Start-ups which are not yet to launch their first product cannot avail subsidy on their products in
Gujarat as they are unable to fulfil minimum eligibility criteria for empanelment.
31
CHAPTER VII
7 RECOMMANDATIONS
Sickle Innovations is a start-up by young and talented entrepreneur to make agriculture
practices easy for small and marginal farmers by designing farm equipment which are affordable
by them. Cotton picker being first product can solve problem of drudgery involved in cotton
picking, but also being small organisation it have certain limitations which can affect its
approach for targeting farmers directly. Unavailability of subsidy on product designed by
organisation which do not have at least two years of business also affect its approach.
In this report I analysed three different channel for targeting farmers, i.e. Traditional sales
channel, Farmer producer organisation and through textile manufacturers. Here I would analyse
strength, weakness, opportunities and threat (SWOT) of each channel, SWOT analysis can give
clear picture of each channel.
32
Opportunities
Other products of Sickle innovations like Weeder and Fruit Harvester are in the development
phase, it would be easy to launch these products in the traditional sales channel if the company
can establish good relationship with the dealers and the retailers of cotton picker in large
geography. The brand presence of “Sickle” in the sales channel and among farmers will reduce
the cost of product launching.
Threat
Along with catering to large number of farmers with this channel, it will also expose the product
to other manufacturers which would increase the threat of violation of patent rule by other
manufacturers with no or slight modification. Other manufacturer can enjoy the benefit of
product awareness created by Sickle Innovations without any cost. Also companies which are
importing this product currently but are unable to sell owing to poor or no marketing efforts will
be able to push their product in the market. This would certainly reduce the company’s sales
turnover.
33
Weaknesses
FPO’s only provide this service to their members thus limiting the number of farmers who can
avail the benefits of the products from the FPO. FPO also have more bargaining power as they
provide the access of products to a large number of farmers at once which can force companies
like Sickle Innovations to reduce the price of their product thus compromising on profit per unit.
Opportunities
Similar to traditional channel cotton picker presence in FPO can also open opportunity for the
upcoming product like Weeder in FPO for targeting large number of farmers. Also acceptance of
product by FPO can create demand among the farmers who are not the members of the FPO.
Threat
As such there is no threat from FPO’s, expect if product won’t work well, then it will create
negative image of product with farmers, and also affect relationship with FPO’s. Good
relationship with FPO’s can help in creating market for other upcoming product
Strengths
Cotton mills like Arvind procure cotton bales from ginner which are based in cotton growing
area and are also involved in contract farming for better quality cotton. They can provide product
to their farmers and can promote the use of cotton picker and cotton bags for clean cotton
production. As Sickle innovations products are also going through other big mills this would
create positive perception for the product among the farmers. Supply of cotton bag along with
the cotton picker would serve as an additional source of revenue for the company, also catering
34
to large number of farmers at once helps in early breakeven of the product reducing the risk of
losses.
Once the product is accepted by the cotton mill, it would create demand from the customer side
for clean production thus reducing the cost involved in product promotion and demonstration.
Weaknesses
Sickle Innovations as of now being small start-up does not have much bargaining power. Cotton
mills as a large buyer can reduce the product price by negotiating. Also any contract which can
bind the company not to sell the product to their competitors (Cotton mills like GTN) would
result in big market loss for Sickle Innovations.
Opportunities
Cotton mills can open up door for creating awareness for other upcoming products. Also other
products can also reap up the benefits of the brand awareness already established by Sickle
Innovations.
Threats
If the relationship between the cotton mills and the farmers deteriorates it will also have a
negative effect on the image of Sickle Innovations.
SWOT analysis of all these three channels show the merits and the weaknesses of each channel.
Sickle innovations have some conditions which affect its target channel. Some of the condition
are following
Early break-even:
Early break-even of the product is desirable for the investors for early exit. Also Sickle
Innovations needs break even before this product is copied by other manufacturers with slight or
no modification. Other manufacturers who are already having their own sales channel in place
can capture market created by the company before breakeven, and if they then it would affect the
profitability of company.
35
Technological Advancement
John Deere is already in the process of developing big cotton picking machines in the country,
the product that the John Deere is trying to develop is highly advanced and efficient in terms of
picking per hour then the product developed by Sickle Innovations. This product would affect
the market of the company as farmers prefer custom hiring of big machines which are more
efficient and can save more time and cost. Thus Sickle Innovations needs the break-even of the
product before the development of such products by large manufacturers.
Capabilities
Sickle Innovations have limited Human and financial resources therefore it should select the
channel which could give maximum turnover with the least cost, at least till the product break
even is achieved to reduce the chances of loss. Due to its limited Management capability it
would be difficult for Sickle Innovations to target the large segment which requires more human
resources.
Based on the analysis of different channels and the limitations that Sickle Innovations has
currently it is clear that launching the product with cotton textile mills and FPO is more suitable
for the organisation as compared to the traditional sales channel, even though our ultimate goal
of providing the benefit of the product to maximum number of farmers can be met through the
traditional channel, which is accessible by all farmers who are not the member of any FPO,
neither have direct influence of any cotton mill and ginning mill.
Currently best option for organisation is to collaborate with cotton mills like Arvind mills and
other mills who are following similar cotton procurement and FPO’s. It will help in creating
awareness of this product among the farmers, after it if Sickle Innovations follow traditional
sales channel it would require less effort to attain the maximum reach.
36
Table 14 : Region 1
Sr. No District Area( In Thousand)
1 Amreli 2.339
2 Bhavnagar 3.139
3 Jamnagar 1.903
4 Junagadh 0.607
5 Probandar 0.135
6 Kutchh 0.569
7 Rajkot 3.509
Total 12.201
Region 1 consist of western of Gujarat, it is maximum area under cotton cultivation. FPO like
Maha Gujarat Sangh and Avirat also have its presence in this region
Figure 5 : Map of Gujarat
37
Region 2
Region 2 is the central part of Gujarat, which consists of Ahmedabad, Vadodara and the nearby
areas.
Table 15 : Region 2
Region 3
Region 3 consists of the South eastern part of Gujarat, cotton cultivation is less in this
part.
Table 16 : Region 3
All the three regions can be used for product distribution all over location.
38
Figure 6 : Sales Channel
One dealer can be placed in each region, who would be having the responsibility of distributing
products to the retailers of that region. The dealer would also be having the responsibilities of
arranging production demonstration to farmers which can be done company’s own sales force
which is having expertise in using the product.
39
Roles and responsibility of dealers and retailers would be the same except initially Sickle
Innovations may also need to have a product buy back mechanism. Product buy back mechanism
would give sense of security to the dealers and retailers against any loss that can be caused by
low sales of the product. If the company is having product buy back mechanism, then the dealers
and retailers can keep more number of units expecting good sales without fear of loss caused by
less sales. It will also avoid any loss that can be caused by any inventory stock out.
40
CHAPTER VIII
8 CONCLUSION
With the increasing cost of labour and labour shortage, there is need for product which can
reduce the cost and drudgery involved in cotton picking. Cotton picker developed by sickle
Innovations can play an important role in reducing this problem.
This product can be made accessible to farmers through different channel, i.e. traditional sales
channel involving many stakeholder like wholesaler, retailer etc, FPO’s, and Cotton mills like
Arvind Mill. Each channel has certain advantage and disadvantage to it. Considering the
capability of Sickle Innovations, need for early breakeven and unavailability of subsidy at initial
stage it would be more beneficial to involve any other organisation who can support promoting
their product among their member farmers to create product awareness and demand for this
product. Cotton Mills and FPO can promote this product. These organisation can provide
product to farmers at less price then the price at which it is available through the traditional sale
channel.
Once Sickle Innovations is eligible to provide subsidy on its product from the Government of
Gujarat, it can provide the product to the farmers at very low price.
Sickle Innovations currently requires established dealer network, sufficient human and financial
resources before going on providing access of products through traditional sales channel, so it
would be more feasible to first launch the product with other cotton mills and FPO’s and then
take it to the other channels.
Snapdeal on December 23, 2014 launched Agriculture store, catering to educated and
technological advanced farmer which can be another attractive Market for Sickle Innovations.
41
CHAPTER IX
9 REFERENCES
Agrawal VP, Verma A, Agrawal S (1992). Computer-aided evaluation and selection of optimum
grippers. Int. J. Prod. Res. 30(11):2713- 2732.
Faso Burkina, Project document: Prevention of seed cotton contamination in Africa, Common
Fund for Commodities, The Netherlands Viewed on 12 December 2014, Available on:
[Link]
Faulkner WB, Wanjura JD, Boman RK, Shaw BW, Parnell CB (2011). Evaluation of modern
cotton harvest systems on irrigated cotton: economic returns. Appl. Eng. Agric. 27(4):515-522
Konduru,Srinias
a study of mechanization of cotton harvesting in India: implications for international markets,
Center for Agribusiness; Jordan College of Agricultural Sciences and Technology; California
Pandey, M.M. (2010), “Present Status and Future Requirement of Farm Equipment for Crop
Production”, Status of Farm Mechanization in India, pp. 69-113 (Website: [Link])
42
Prasad J, Mujumdar G (1999). Present practices and future needs for mechanization of cotton
picking in India. Agril. Eng. Today 23(5-6):1- 20.
Sandhar NS (1999). Mechanized picking of cotton in Punjab – Some experiences. Agril. Eng.
Today 23(5-6):21-27.
Shoji Lal Bairwa et all, Agricultural Inputs and Service Delivery Systems in India: A Review,
Viewed 25 November 2014, Available from:
[Link]
V,Madhuri, Shah, [Link] Contamination, its Sources and Measure, Viewed on 5 December
2014, Available From: [Link]
43
Annexure
Annexure 1 : Matrix for product Comparison
Target
Requirement Product Post Sale Custome Time Of
/Product Innovative Demonstration Service r Purchase Cost Size Competition Acceptibility
Sprayers No No Less same Same Lesser Same other spray Yes
Rice Yes Yes Yes Same Much More Big Labour Yes
Power Little Almost
Sprayers Yes Little Yes Same Earlier Same Bit Big Spray,Labour Yes
KisanRaza Yes Yes Yes Almost Na Almost Small Labour No Idea
Milking
Machine Yes Yes Yes Labour Yes
i
Annexure 2 : List of Companies
ii
Annexure 3: Screenshot of [Link]
iii
Annexure 4 : FPO's In Gujarat
Name Address
Sahyog Krishi Vikas Sahyog Krishi Vikas Private
Private Ltd Limited, Near Shukan Oil Mill
Rampura Road, Village Bela,
Tal : Talaja, Dist : Bhavnagar,
Gujarat
iv